Deal brokered for take over of defunct Sylva fiber lines

A pending sale of 19 miles of fiber lines capable of delivering high-speed internet in the greater Sylva area could once again give internet customers there a third option.

If the sale goes through, Jackson County and the town of Sylva could recoup a portion — although not all — of an economic development loan extended to the company that built and operated the lines before it went out of business.

The network of high-speed fiber optic lines were put in incrementally during the past decade by a small, start-up company in Sylva, Metrostat. It was an impressive and entrepreneurial undertaking for the local internet provider to try to go head-to-head with phone and cable companies for internet customers.

Metrostat’s fiber primarily ran along the town streets of Sylva and down major thoroughfares, where businesses and residents already had two choices for high-speed internet: either cable from Morris Broadband or DSL from Frontier phone company.

Ultimately, Metrostat couldn’t compete and threw in the towel late last year.

Metrostat had borrowed a total of $500,000 in economic development loans from the county and town in 2004. While the company made sporadic payments, the amount they were paying wasn’t enough to offset the interest that was accruing. As a result, the company still owed the town and county $500,000 at the point it closed down and turned over its assets last year.

The county and town will sell the lines for $75,000, with part of the payment upfront and part made during the next five years. The buyers are BalsamWest, a nonprofit consortium formed to address the lack of high-speed internet in rural communities, and Dnet, a for-profit internet service provider based in Franklin.

In addition to the cash offer, BalsamWest and Dnet will make additional payments depending on how many customers sign up for service, by giving the town and county a cut of the initiation fee for new customers.

The offer is better than the first one that BalsamWest made.

“We are a good bit better than we were when we started,” said Jackson Commissioner Chairman Jack Debnam.

The initial offer was so poorly received that BalsamWest withdrew it. The offer on the table now was approved by the Jackson commissioner Monday and will be approved by the Sylva town board Thursday. There is a 10-day upset bid period should anyone have a higher offer.

If BalsamWest and Dnet hope succeed with the fiber lines where Metrostat didn’t, they’ll likely have to offer cheaper, faster or more reliable service than the competing DSL or cable internet service.

“That’s what a potential customer would be looking at,” Sylva town manager Paige Roberson said.

In less populated areas — not only in Jackson County but across the mountains — options for high-speed internet are slim to none. Putting in the cable, DSL phone or fiber lines is expensive. There simply aren’t enough customers in rural areas to make back the cost of laying lines to those areas.

Ideally, however, the county hopes BalsamWest and Dnet find a way to bring high-speed internet to areas where it doesn’t exist now.

“Realtors say that’s the first thing people ask — ‘Can I get high-speed internet?’” Wooten said.

Since laying fiber is too costly to service rural areas, Wooten is putting his hopes into the prospect of wireless internet signals beamed from towers. With the right setup, towers could offer wireless high-speed internet on a landscape scale. Metrostat had installed one such wireless internet tower as part of their fiber network.

BalsamWest and Dnet have pledged to explore the feasibility of putting up more.

“We are not going to get back all of the money so if they can provide a public service that is our primary concern now,” Roberson added.

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